On-line advice

India’s new guru

MARKETS are meant to move on fundamentals. In India, however, regulators suspect that they are moving to the tune of a clever trader called Harshad Mehta. So far, they have not worked out what they ought to do about it.

Mr Mehta, a stockbroker in Mumbai (Bombay), was allegedly at the hub of India's largest-ever securities scam in 1992. The Bombay Stock Exchange suspended him from trading, and he faces 21 charges of conspiring to defraud banks. His bank account is under surveillance, all his properties are attached, and he needs court permission to leave the city. This has not stopped him from staging a fighting comeback. Mr Mehta has launched a site on the Internet, turning himself into India's leading stockmarket guru.

The site, India 2002, strives to be entertaining. Browsers at www.harshad.com can read Mr Mehta's articles, with colourful titles such as “Play Bull and Save the Country from a Second Colonisation”. One piece, depicting the world as a bazaar in which each country has a shop to itself, laments that India is selling her wares too cheaply. Another, “People that I Admire Most”, offers vignettes about Warren Buffet (the ultimate value investor), George Soros (he made a billion in a day and then turned to philanthropy), and India's finance minister, Palaniappan Chidambaram (whose common sense Mr Mehta much admires).

The Securities Exchange Board of India, the stockmarket regulator, is more interested in Mr Mehta's on-line column, called “I Recommend”. This has tipped shares in three companies. Trading volumes and prices of the three have spurted. The regulators suspect that Mr Mehta may be playing the market. After they questioned the Bombay Stock Exchange, the exchange reminded Mr Mehta of its rule that members, even suspended members, cannot advertise their opinions about particular shares.

Mr Mehta denies that he is investing in the shares he recommends on India 2002. If prices leap following his recommendations, he says, this only points to how desperately investors want more investment advice. Rather than quashing his activities, says Mr Mehta, regulators ought to recognise that he is helping ordinary investors, who would normally be put off by the stockmarket's casino culture, to learn to love equities.

Mr Mehta takes his new role as a market interpreter very seriously. He writes columns for around 20 dailies, lectures at universities and is designing courses on capital markets. Reuters has even offered him a screen to air his views. For the moment, however, he has agreed not to advise investors to buy or sell particular stocks. The regulators remain unimpressed. The Bombay Stock Exchange says that it is continuing to examine Mr Mehta's dealings.